On Feb 28, 2012, at 8:48 AM, Tony Rolfe wrote:
> Borrow at 0%, buy T-bonds at 2% (or higher, if inflation picks up).
>
> That's not really speculation is it? Somehow I thought these guys
> borrow at 0% and then trade pork bellies.
That too. Or anything.
The carry trade (borrow at 0, lend at 2) is speculative because if prices turn against you (i.e., long-term rates rise) and you're heavily leveraged, you can lose your shirt.